6  

Getting a Distribution Deal

The U.S. Distribution Deal and What to Expect

So how do you actually go about getting a U.S. distribution deal for your film? In the previous sections, I’ve discussed things you can do during each stage of the production process that will give your movie infinitely better chances at getting distribution. So now that you’ve done all those things, how do you actually secure a U.S. deal for yourself, and what should you expect?

First of all, as I explained before, a U.S. distribution deal has become harder and harder to come by in recent years. So actually, getting a deal is quite a feat. There are a few different avenues to focus on when considering distribution in the United States. They include the following types of U.S. distribution:

•  Theatrical

•  DVD

•  Broadcast

Sometimes when you get a U.S. distribution deal, you sell all of these rights at once (all-rights deal), and sometimes you sell each rights group separately. There are advantages and disadvantages to both.

The advantage of selling all three of these rights groups at once to a single distributor is that, hopefully, you will see a bigger up-front payment as an advance. For example, say your picture wins an award at the Sundance Film Festival. If that is the case, you will most likely be approached by distributors who want to sign an all-rights deal with you. Realistically, the only companies that would be offering this type of deal to you are the mini-majors (the independent arms of the major studios)—they are the ones with the deep pockets. The mini-majors include Sony Pictures Classics, Warner Independent Pictures, Paramount Classics, Focus Features, Fox Searchlight, ThinkFilm, Lions Gate Entertainment, and Samuel Goldwyn Films.

The disadvantage to selling all your rights to one distributor is that whatever payment you get from that one distributor—that’s it. You do not have the opportunity to go out and get additional sales on your film to make any additional money. So if the advance offered isn’t enough to pay your investors back, tough luck.

During negotiations with a U.S. distributor, you should always at least try to carve out U.S. broadcast rights for yourself. Most likely, the big companies will not let you do this. However, if you are able to carve out those rights for yourself, you will have the opportunity to sell them directly to a broadcaster. That way, all that money will go into your pocket instead of the distributor’s.

Keep in mind, though, that the reason U.S. distributors are able to pay you a high advance for your film is because they calculate they will recoup that in ancillary sales: DVD, broadcast, and foreign.

One thing to look out for when you are selling U.S. distribution rights is that many sales agencies (not distributors) will offer you a distribution deal for little or no advance up front. This is a very common scenario for independent films because, as you can imagine, the Sundance example I outlined above is for only a small handful of people each year. In fact, unless you get into Sundance or one of the other Tier 1 festivals, you have very little chances of getting an all-rights distribution deal with one of the mini-majors, along with the accompanying big payout.

My advice to you is this: if you get offered a distribution deal by a sales agency, look very carefully at who they are and the types of films they sell. First of all, know that they are not offering you a “distribution” deal. They are offering to take all your rights to your movie and sell off those rights to various distributors. So don’t get confused by the terminology! I hear so many filmmakers saying they have been offered distribution deals—but in reality, it’s just an offer from a sales agency that is going to turn around and sell your film to distributors.

Bottom line is that if you are going to sign with a sales agency for distribution, do not do an all-rights deal if you can help it. I would recommend signing away only the foreign rights to the sales agency, and keeping the U.S. rights for yourself. The reason is because you can always approach U.S. DVD companies and broadcasters directly; you do not necessarily need the services of a sales agency for that. However, you may want the agency’s expertise with selling the foreign-distribution rights.

It is also becoming more and more common for U.S. DVD distributors to ask for foreign rights when they acquire the U.S. DVD rights to a picture. In order to recoup their advance and add to their bottom line, they have developed distribution partnerships in foreign territories, so they try and make a few foreign sales here and there to recoup their investment. So be on the lookout for this, and decide whether the advance the DVD company is offering you is worth giving up foreign rights.

How to Approach U.S. Distributors Yourself

As I said, getting a U.S. distribution deal is quite a feat. Many filmmakers ask me if they should go ahead and start submitting to U.S. distributors themselves once they have a completed project. My answer is always not yet.

What I recommend doing with U.S. distributors is first waiting to see if you get accepted to any of the Tier 1 film festivals. This is because if you end up premiering your film at one of those, you will have much more leverage with distributors than if you were to go to them before that festival.

So Plan A is to wait and see if you get into a Tier 1ne festival. However, if you are not applying to any Tier 1 festivals, or you do not get accepted to any, then go to Plan B. This means submiting to U.S. distributors yourself. Now, that doesn’t mean that you should start submitting in a haphazard fashion. Rather, it means starting at the top and working your way down.

A good way to go about this is to research appropriate distributors for your movie, starting with the mini-majors on down to straight-to-DVD companies and cable broadcasters. Be sure to start with the bigger companies first. They are more likely than the smaller companies to want to acquire all rights for your film. If you’ve already sold off DVD rights to a straight-to-video company, then you will no doubt lose out on this much bigger deal.

If one of the bigger distribution companies decides to acquire your picture and take all rights, then great! If not, as you work your way down the target list you’ve created, just make sure that you separate out DVD companies from broadcasters, and so on.

Here is a step-by-step list of what to do should you want to approach U.S. distributors yourself:

1.  Take an honest look at your movie and decide for which distributor you think it’s a fit. Study distributors’ web sites as well as their past and present slates. Do they distribute only movies with big cast, for example? Do they specialize in foreign films? Is everything they distribute from a star director? If your film doesn’t fit into what their model is, then don’t waste your time or theirs.

2.  Research distributors that have had success with your type of picture. At this point, you’re probably looking at straight-to-DVD distribution, so head back to the video store and see what companies put out your type of product. Make a list of these companies, then go home and investigate their web sites. You’ll be able to contact an acquisitions executive from there. Prepare an email to them with a link to your web site, trailer, and synopsis. That way, they can decide if they would like to consider your film for distribution. Once you’ve sent the email, wait a week. If you haven’t heard anything back from them by then, it’s O.K. to follow up with a phone call.

3.  Research U.S. broadcasters that have had success with your type of movie. Flip through the cable channels and check out who broadcasts independent films these days. Again, go to their web sites and look for submissions guidelines. Send them an email with a link to your web site and trailer. If they get back to you and request it, send them a full screener copy of your movie. I’ve heard broadcast executives say that they wish more filmmakers would contact them directly—so you can definitely do it yourself!

Filmmaker Case Study: David Basulto, in His Own Words

When I decided to direct my first film, I knew that the safest bet was to make a horror film. Coming from the $3–5 million–dollar budgets I had produced to a meager $30 K, I was left with many challenges. My biggest concern was making back the money I was investing.

Although I had many contacts in the distribution world from my previous films, this was an entirely new world I was entering, the microbudget world. The good news was, there are so many new avenues of distribution. From online downloads to DVD, I felt confident I could find a home.

The bad news was, I didn’t know who to turn to, as my distribution friends were late returning email and calls when they found out my new film was made for such a tiny budget. “Where was the money to be made in that?” they would say.

So I started a quest that would take me the better part of a year, taking meetings with prospective sales agents and distributors. I am lucky that I know the game a bit as far as deals and percentages. I can see how the uninformed can be taken for a nice ride, never seeing a dime from their hard work.

I ended up contacting buyers from international sales companies and pointing them to my web site to view a trailer. I was able to sell three territories this way. Lots of work, but at least I made 50 percent of my cash back! The beauty of this age we are in is, we can do research online for just about anything now. I decided to start pursuing domestic distribution.

After a long, arduous search, with many deals that would include no up-front moneys, I was very fortunate to meet Doug Schwab from Maverick Entertainment. Maverick specializes in smaller films straight to the DVD markets. After a week of negotiating, we made a deal that included a payment schedule. The first payment was made exactly on my delivering the elements of the film. I was impressed with the professionalism. And I made back my film’s investment!

All in all, the experience was a bit stressful at times, but I gained a world of knowledge and am ready to tackle it again! My film Death Clique is currently in Blockbuster, Netflix, and Amazon.

Foreign Distribution and What to Expect

So now that you know how to go about getting a U.S. distribution deal for your film, how about getting foreign distribution? Unfortunately, foreign-distribution deals don’t bring in the money they once did, but the good news is that there are still several types of foreign-distribution deals to be made.

I’ll start by saying that if you’re lucky enough to get an all-rights deal from a U.S. distributor (for example, one of the mini-majors), you won’t have to worry about getting foreign distribution for your film. It will be distributed in foreign territories through the various partnerships that exist between U.S. mini-majors and foreign theatrical and DVD distributors and foreign broadcasters. How does this work? Because most of the mini-majors fall under the big umbrella of a studio (for example, Focus Features is part of Universal Studios, and Warner Independent Pictures is part of Warner Bros.), they automatically get to take advantage of the output deals that exist with foreign-distribution channels, as well as international operations such as local offices.

For the mini-majors that do not fall under an umbrella of a studio (ThinkFilm, Lions Gate Entertainment, and others), the situation is a little different. Fortunately, by virtue of having U.S. theatrical distribution through one of these high-level companies, you will have a much easier time finding foreign distribution, because these nonstudio mini-majors are so well respected. For example, if you have U.S. theatrical distribution for your picture through Think-Film, you will most likely be picked up by one of the top foreign-sales agencies, who will then secure foreign-distribution deals for your movie.

If you do not have U.S. theatrical distribution for your film, then there are still a few avenues you can take to sell your project to foreign territories:

•  Through a U.S. DVD distributor

•  Through a U.S. broadcaster

•  Through a foreign-sales agency

•  Do-it-yourself

Through a U.S. DVD Distributor

Certain U.S. DVD distributors will ask for worldwide rights when acquiring your film. The reason is because several of these companies have developed partnerships in foreign territories and have created their own mini-output deals. So, for example, say you get offered a U.S. DVD deal by XYZ distributor, and they request worldwide rights. They will then go and offer your picture to their foreign partners, and give you a percentage of whatever advance has been agreed upon. Obviously, the benefit of this arrangement to the U.S. distributor is that any foreign sales they make on your movie will help their own bottom line. In the past, this wasn’t a very common solution—most U.S. DVD companies didn’t want to be bothered with the intricate business of foreign sales. But once they discovered that they could simply establish relationships with a few reliable partners in each territory (similar to the studio model), it became more appealing to them.

The benefit to you, of course, is that you have an automatic foreign-sales agent working for you to sell worldwide DVD rights to your film. So you do not have to worry about trying to sell these rights yourself, or hiring a sales rep to do it for you. It’s all part of your U.S. deal. Before you sign over the worldwide DVD rights to your U.S. distributor, however, the one thing you want to make sure about is what their results have been in making foreign deals on other films in their catalog. Before you sign a deal with them, ask for filmmaker references so you can contact some people that they work with to see what their experience has been, to make sure they got accounted to and paid properly for any foreign sales that were made, and so forth. You can also ask the U.S. DVD company what their results have been, and what they project your picture can do in foreign sales, and then decide if you want to tie up all your rights with them.

Through a U.S. Broadcaster

There are also certain U.S. broadcasters who will ask for worldwide rights when acquiring your property. For example, Discovery Channel, Lifetime, Hallmark Channel, History Channel, and many other networks all broadcast on cable systems throughout the world. Therefore, if Lifetime acquires your film for U.S. broadcast, they will most likely ask for worldwide broadcast rights as well. What’s different here from the DVD scenario is that they will not be selling your film to third-party broadcasters, but rather, keeping it for their own network in the different foreign territories. So you won’t be getting any percentages of foreign sales as in the DVD example. Therefore, you want to make sure that you are fairly compensated for signing away worldwide foreign-broadcast rights to your film.

If you think you can get more money by selling the international broadcast rights separately or on your own, then limit your deal with the U.S. broadcaster to U.S. rights alone. Keep in mind, however, that foreign-broadcast rights are much tougher to secure than foreign-DVD rights, so don’t shoot yourself in the foot by thinking you can do it all yourself. To decide if you would even have a chance, make sure you do adequate research into some foreign broadcasters and what types of independent films they are programming.

Through a Foreign-Sales Agency

I’ve already described what a foreign-sales agent is and how to go about getting one. Working with a foreign-sales agent can be very effective in getting international distribution for your movie. The main reason is because that is what they are dedicated to. Their whole reason for being is finding international distribution deals for independent films.

One benefit of working with a foreign-sales agent is that they will bear the cost of taking your picture to all the international film markets, and therefore exposing your work to a very large contingent of buyers from all over the world. Going to the film markets is no cheap expense, and is something you’d be hard-pressed to do on your own. For this reason alone, there is a huge value in working with a foreign-sales agent.

One downside to working with such an agent is that their high costs of doing business get passed on to you in the form of high commissions per sale and recoupable expenses allowed. Therefore, at the end of the day, you may not actually see much money from the foreign-distribution deals—because the first $30 K to $50 K in sales will go toward covering the agency’s marketing and other hard costs. This is frustrating for many filmmakers (understandably so). Because the acquisitions prices in the international marketplace are so low to begin with, working with a foreign-sales agent almost always means the filmmaker will never see a cent.

Do-It-Yourself

If the thought of working with a foreign-sales agent doesn’t appeal to you, then you can always go the do-it-yourself route. However, I must warn you that the do-it-yourself route to foreign distribution is not only more difficult than that in the United States, but much more expensive. Be prepared for shipping costs, high phone bills, travel expenses, and film-market expenses.

If you decide to go for it anyway, then the first question is: Who are the foreign DVD companies and broadcasters that buy independent films? You can buy lists on the Internet, but are they current and correct? Honestly, the best advice I have here is to see if you can get some word-of-mouth recommendations from other filmmakers who have gotten foreign distribution. Then start contacting these companies directly. Internet message boards are a great source of word-of-mouth recommendations for foreign buyers.

The best approach I have found for filmmakers to contact foreign distributors directly is first via email (send an introductory email with a link to your web site and trailer), and then follow up with a phone call. If the distributor requests a screening copy of your film, be sure to send it via FedEx, UPS, or DHL so that you can get a tracking number. It is customary to follow up with an email and phone call to make sure your package was received.

Another way to track down foreign buyers is to attend the international film markets. Filmmakers are now creating co-ops and pooling their funds together to get a booth in the actual market. This can be an affordable option if you can get five to ten filmmakers together. Once you are registered as a seller at a film market, you will be given access to the entire list of buyers. This list is golden—it will not only serve you for the particular market you are attending, but for long after the market is over. Once you have access to the buyers list prior to a market, it is customary to send out emails requesting meetings with buyers. Of course, you will need to come up with a listing of all the films you’re selling at the market, complete with JPEG images of the cover art. You can email this list, and direct buyers to your web site(s), where they can view trailers. The goal is to set up as many appointments as possible for the market. Once you are there, you should hire someone to be in the booth with you. This should be somone who has experience selling at a market. It will be well worth the money—their services will end up paying for themselves.

Expenses Required to Market and Distribute a Film

Whether you sign directly with a distributor, go through a foreign-sales agency, or self-distribute, you should be familiar with the expenses required to market and distribute a picture. This is especially true because you will be charged these expenses before you are allowed to share in the profits.

As you can imagine, it is very expensive to market and distribute an independent film. That is why when you sign a deal with a distributor, they will require that they are allowed to recoup anywhere from $10 K to $25 K (in some cases more) before they begin sharing profits with you. Because they are investing this much in marketing and distributing your movie, it is only fair that they get their investment back through sales.

When you are signed on with a U.S. distributor or foreign-sales agency, you will be accounted to every quarter, biyearly, or yearly in a producers report. The producers report will outline the expenses incurred for the period in question, and you will be able to see how close the distributor is to recouping the contractual marketing expenses. Once the distributor recoups the agreed amount of expenses, you will start receiving checks with your producers report for your portion of the profit share.

Normally, you can expect to receive a producers report or accounting statement thirty to forty-five days after the quarter, or half, or year has ended. So if you are due quarterly accounting reports, and the first quarter ends on September 30, then you should get your accounting report around October 30 or November 15.

Here’s what a typical expense report might look like if you are doing a theatrical release for your film:

April 30, 2006

Stacey Parks

P.O. Box 72A

Los Angeles, CA 90261

Type: Feature Film

Territory: Worldwide

Per distribution agreement dated November 24, 2003

Term ends: November 24, 2010

For the period ended September 30, 2006

GROSS RECEIPTS

International receipts	$10,000
Domestic receipts	$20,000
Total Gross Receipts	$30,000

DISTRIBUTION FEES AND MARKETING EXPENSES

Distribution fee	25% = $7,500
Market fee expense	$10,000
Promotional expenses	$15,000
Delivery expenses	$5,000

Total Distribution fees and expenses    $37,500

A few things to note from this report:

•  This is a sample report from a foreign-sales agent to a filmmaker.

•  Note that the expenses for this period were higher than the revenue, meaning that the filmmaker doesn’t receive any of the revenue.

•  There is a film market somewhere in the world practically every quarter, so you can expect to see these charges on every report.

•  Most importantly, you will not be paid any profits until your accumulated sales revenue surpasses the expenses cap agreed to in the contract. So make sure the cap you agree to is as low as possible!

Filmmaker Case Study: Robert Brinkmann, in His Own Words

Robert Brinkmann talks about finding distribution for his independent film Stephen Tobolowsky’s Birthday Party.

I really had no idea how much work it would be to do this release ourselves. Had I known then what I know now, we might have taken one of those offers that looked so bad at the time. We have spent a lot of money and an enormous amount of time getting the DVD out and promoting sales. Though we have had enormous success with press attention—just go to our web site (www.stbpmovie.com) or Google the name of the film to check it out.

I doubt anyone could have done better in terms of free publicity: from multiple appearances on CNN to the front page of the L.A. Times Sunday Calendar section, from radio appearances all over the country to wonderfully supportive reviews (including two in Variety!), we have had more press than any microbudgeted film can possibly hope for. Despite all this press, however, I have learned that it is necessary to be readily available to the customer. Even with the readily accessible Internet, there is a fairly high threshold to get somebody to buy your DVD.

Here is something to consider when thinking about self-distribution: all of this attention does not give us the same amount of sales as the complete turkey of a movie Warner Bros. releases straight-to-DVD. Any studio, through their retail partnerships, ships more units on something that is completely unwatchable than we can sell on the Internet—just because they have a certain amount of sales built in through retailers who will order a package of their releases. It is hard to compete with these guys, and not as easy to sell over the Internet as you might think.

Of course, you will sell to people who are interested in what you are doing or who know you or your principals. What’s harder is to get others, who may be curious or have heard about your project, to get on the computer, pull out their wallet, and place an order. Anytime we slow down with our promotion, we notice a drop in sales. That’s why we decided to go on a tour of the Apple stores and give a presentation on the making of our film (don’t worry, Stephen will be there and entertain the audience, so it won’t be technical or boring—the calendar of appearances is on our site) to keep awareness up. We started our promotion during the festival run of our film, and redoubled our efforts with our self-release on May 30 of this year. I have run into so many people who have heard about Stephen Tobolowsky’s Birthday Party and are curious about it (and have no idea I was involved, so it is not through me) but have not ordered it. Think about that: they know of the film and want to see it—but they don’t buy it! I am convinced that, if they saw it in front of them in a store, we would have gotten a sale.

For this reason, we are backtracking a bit and talking to distributors and sales agents about helping us get the film into stores. I think, after the experience so far, that seeing the product and being able to hold it in your hands makes a difference to a lot of potential buyers. Though the profit margin will be much lower (we make three times as much on a DVD sold on our web site as on one sold through a distributor), the numbers more than make up for the discrepancy. And even though we have been able to get into some stores, it is way too involved to try and get into as many as is necessary.

We have one great advantage—we don’t have to sell. We have a viable commercial product, and can wait if necessary to find a deal we like. Usually, making a film is so expensive that it is hard for producers to hold out. Of course, distributors know this, and can use the financial pressure to their advantage. HDNet—one of the natural outlets for films produced on HD, and a good match for us—had enough interest from their viewers to approach us about distribution, but their offer was so low that we would have broken even at best. Since we could afford to wait, we turned them down. Any producer who mortgaged their house would have had to take their offer not to lose it.

As far as the effect of marketing is concerned, it has been very hard to see a direct correlation. When Stephen flew to Chicago to spend an hour on WGN’s Nick at Night, we didn’t have any sales in Chicago that weekend, but an uptick in the South. We have had a fair amount of sales in Chicago, though, so his three appearances on the show (we were extremely lucky that Nick is a fan of Stephen’s) clearly had an effect. Stephen’s philosophy is that you just have to keep plugging, and that no marketing effort is a waste—it will all add up and eventually lead to critical mass, and then the whole thing takes off. Since we can’t spend any money on this effort, we just do everything we can, and consider nothing a waste or a dead end.

The best advice I can give any filmmaker is to make sure that you have a unique angle to sell your product (in our case, it’s that guy!), and a performer with a vested interest in the outcome of the release, so that the support to publicize the film is built in. Even then, think long and hard about whether self-distribution is the way to go.

My hope for the future is that the delivery of films will change along the same lines as music distribution. Once Apple sells everyone’s movies through the iTunes Store, independents will have an easier time reaching the consumer. (I know there are other services, but I’m biased toward Apple, and think they will be more successful at it.) It will be a road around the entrenched interests, who protect their turf and may not always be honest, and directly to the end user.

Suggested Exercises for Part Six

1.  Contact five U.S. and five foreign distributors and ask if you can submit your film. What are their requirements for submission?

2.  Pretend your instructor or partner is a U.S. distributor. Pitch him or her your movie and why he or she should distribute it. Who is your market? Hint: now’s a great time to showcase your market research. Post your pitch on the discussion board.